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Bitcoin and the New Tax Plan

On December 22, President Trump signed his tax reform plan into law. The Tax Cuts and Jobs Act passed Congress with a vote of 51 to 48 in the Senate and 224 to 201 in the House. It’s the most sweeping tax overhaul in 30 years. So, how will cryptocurrencies fare under the new plan? Pretty well, as it turns out. Here’s why Bitcoin investors stand to benefit from Trump tax reform.

About the Bill

The new tax plan:

  • Cuts personal income tax rates by several percentage points across tax brackets.
  • Nearly doubles the standard deduction for all filers.
  • Suspends the personal exemption (currently $4,150)
  • Ends the individual mandate of the Affordability Care Act, removing the tax penalty for uninsured individuals.
  • Massively cuts corporate tax rates from 35% to 21%
  • Suspends or limits most itemized deductions.

Some of these changes, like the tax cuts and doubling of the standard deduction, will expire in 2025. That’s enough time for the federal government to lose out on a big chunk of revenue. The tax plan is expected to raise the federal deficit by about $1.46 trillion, according to some estimates – and, if the cuts are not allowed to expire, that figure will rise.

With the national debt already hovering around 20 trillion, an increase may not seem like good news. For Bitcoin investors, however, a higher debt delivers some unexpected benefits.

Weaker Dollar, Stronger Bitcoin

The national debt impacts the value of the dollar. With a higher debt and an unbalanced budget, the U.S. Government must borrow at a higher interest rate to make payments. As interest rates increase, confidence drops – and so does the dollar’s value. Trump’s tax reform, with its massive debt increase, could make the dollar plunge over the next decade.

Investors once sought relief from a fluctuating dollar by investing in uncorrelated assets or assets like gold, which are inversely correlated with the dollar’s value. Today, there’s a new option: Bitcoin, which is uncorrelated with any asset and offers superior performance.

Chris Burniske of ARK Investment Management points out that Bitcoin constitutes a new asset class that’s uniquely able to stabilize a portfolio in an era of volatile returns. As the tax plan drives investors towards Bitcoin as a hedge against a falling dollar, the value of Bitcoin will rise.

The stock market may also see some pullback heading into 2019. Although cutting the corporate tax rate from 35% to 21% will boost stocks in the short term, slowing growth and the increasing weight of national debt on the GDP will eventually show up as negative returns in the market. In the long term, investors will seek uncorrelated assets that offer better value, with cryptocurrencies and Bitcoin as the leading options.

Extra Money Flows to Cryptocurrencies

There’s a flip side to the national debt increase that leads to a win-win scenario for Bitcoin. Even as Trump’s tax cuts drag down federal budgets, more money flows into the pockets of certain individuals, and – especially – to corporations. These entities won’t just have a greater incentive to invest in cryptocurrencies, they’ll have greater means to do so. Blockchain adoption could surge as a result.

Companies are already integrating blockchain into their operations. Fintech firm R3’s open-source Corda network is being used by over 60 companies, including Intel and Microsoft. Goldman Sachs and Google are investing in the technology. Public interest is high: when Long Island Iced Tea Corp. rebranded as Long Blockchain Corp. in December, its share price rose 289 percent. Lower corporate taxes let companies devote more funds to blockchain integration, bringing the technology into the mainstream.

Mainstream adoption means more opportunities for Bitcoin investors. The list of businesses that accept Bitcoin as payment is large and rapidly growing. CME’s recent launch of Bitcoin futures, along with Bitcoin ETFs and IRAs, make it possible to use Bitcoin in a variety of ways. Trump’s tax reform makes it possible for individuals to invest more in Bitcoin and use these investments more effectively.

Cryptocurrency Tax Fairness Act: The Next Step?

In September, Rep. Jared Polis and Rep. David Schweikert introduced the Cryptocurrency Tax Fairness Act as an amendment to the tax reform bill. The idea was to create a tax structure for cryptocurrencies, so that consumers could make purchases up to $600 without having to report them. Lifting reporting requirements would incentivize the use of cryptocurrencies on an everyday level.

The Act was not adopted into the tax bill, but remains an open issue. Some fear it would lead to over-regulation, while others see it as a necessary step towards legitimizing cryptocurrency. Either way, the Cryptocurrency Tax Fairness Act shows that legislature takes cryptocurrency seriously and is ready to push for a workable model. We can expect to see more discussion and better solutions over the next few years.


In 2017, Bitcoin prices soared and blockchain adoption exploded across industries. Trump’s tax reform sets an even better stage. Rising debt will increase Bitcoin’s value as investors move away from the dollar to a safer, uncorrelated asset. Lower corporate and individual taxes will lead to increased spending power and greater blockchain adoption. The Cryptocurrency Tax Act and similar bills will improve public awareness. This decade should be exciting for Bitcoin, with plenty of new opportunities for investors.

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Why Trump would be the Bitcoin Volatility driver in 2017

2017 saw Donald J Trump take the office as the new President of United States of America. Right from the moment trump took to office, the global markets were facing uncertainty which lead to price fluctuations over speculation. Economists around the world predicted that Trump’s election might crash the markets. After taking to office, Trump has come out with policies that surely impacted the markets in ways more than one expected. President Trump has been delivering on his promises and has been resilient in sticking to his policies. While the global markets are certainly impacted by the policies, let’s look into how Bitcoin will be affected:

Trump’s initial firm steps:

When Trump announced the Visa ban for seven small economies, things didn’t seem so bad for the markets. The commotion that followed the decision, where major tech giants have joined forces to fight the policy has created uncertainty in the market. This lead to rise in Bitcoin prices during the period as a hedging measure by major market players. Later, Trump suffered a major set back in the appeals court on his immigration ban. The Bitcoin markets have turned a blind eye to this decision showing Trump’s credibility to affect the markets with policies whereas Trump’s setbacks weren’t that important. This only means Bitcoin markets would thrive on the uncertainty created by Trump’s surprise policies.

How Trump’s next steps would be impacting Bitcoin:

President Trump promised phenomenal tax plans last week which prompted for trades going long on dollar and US equities and short on Treasuries. Added to that Trump’s meeting with Japan’s Prime Minister Abe is set to have a short term bullish effect on Dollar-Yen Trading pair. Abe is bringing loads of investment promises which Trump is sure to promote heavily. If Trump does it, without thinking of currency manipulation, then USD/JPY can have a decent spike higher.

Nevertheless any shortcoming on his tax plan promises or mentions of currency manipulation with Japan would see a lot of turmoil in the market and hedging in Bitcoin. This would lead to increased volatility in Bitcoin prices. The first year of Trump’s administration with policies inflicting too much volatility in global markets would inturn make Bitcoin markets volatile.